Campbell Soup Company has taken steps to cut costs and reallocate manufacturing capacity in light of volume declines in the canned soup business in the United States, the company announced Thursday.
The company said it had excess thermal manufacturing capacity both because of the falloff in canned sales and because of switches to different packaging formats, some of which are produced under co-manufacturing agreements.
As a result, the company announced the closure of two plants in the U.S., a Sacramento, Calif. thermal plant that produces soups, sauces and beverages and a spice plant in South Plainfield, N.J. The Sacramento plant employees 700 full-time workers and will be closed in phases with final shutdown expected in July, 2013. Product of these lines will shift to plants in Maxton, N.C.; Napoleon, Ohio; and Paris, Texas.
We must continue to optimize our U.S. plant network
The Camden spice plant employs 27; spice production will be consolidated in a larger Milwaukee facility.
“As we position Campbell for profitable growth, we must continue to optimize our U.S. plant network and diversify our manufacturing capabilities.
"We expect the steps we're announcing today to improve our competitiveness and performance by increasing our asset utilization, lowering our total delivered costs and enhancing the flexibility of our manufacturing network,” said Mark Alexander, president of Campbell North America.
The Sacramento plant was the highest-cost facility among the thermal plants. Alexander said significant investment would have been required if it were to remain open.
Campbell estimates the pre-tax costs at $115 million, and says the moves will result in annual saving of $30 million by 2016.